Wednesday, June 18, 2014

Grande deception?

Starbucks and the “free”
college education for its workers: The reporting on Starbucks’ offer has
gone beyond the headline—and if treated like ordinary advertising, that
headline is misleading.As it turns out,
Starbucks
will only pay in full for two years, not four; it’s negotiated a discount
with ASU online for everyone.And
Starbucks does not pay up front.Instead, the employee must go out of pocket, and get reimbursed only
after sufficient credits have been completed.I don’t think this meets the standard for “free” offers set forth by the FTC.Although most of the Guide is directed at
other situations, it’s pretty clear that material constraints on the “free”
offer have to be disclosed, and the requirement that the employee pay up front
is quite significant, financially.This
seems to me similar to the cases
involving purported early tax refunds, which were instead tax refund
anticipation loans, with very different potential economic consequences.Calling them “rapid refunds” was false and
misleading.

Consider also that Starbucks is using this announcement to
tout its own specialness and corporate social responsibility, as on The Daily Show.So it’s commercial speech, certainly under Nike v. Kasky.Just as dolphin-safe tuna is an intangible
product attribute that convinces consumers to buy even though saving dolphins
does nothing for them directly, so is “free” college tuition for
employees, something Jon Stewart highlighted when he stated that because of Starbucks' announcement he'd be buying from one of their stores. Given all this, should Starbucks be worried about its PR
moment turning into a moment in court?

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